How can a small-to-medium business (SMB) compete in today's market? One strategy is by investing in diversifying the customer experience (CX). Think about the explosion of options for watching television and movies. Today's audiences can binge watch several seasons of a show on Amazon, use a cable package to watch Animal Planet programming, or buy a specific movie and stream it from Amazon Prime.
Consumers have more choices than ever before in every category and industry. A limited number of vendors offering a narrow selection of products has been replaced by a nearly endless selection of products. Perhaps even more importantly, offerings can be accessed through a wide range of consumption options and service delivery choices. For the small-to-medium business (SMB) focused on growth, this one example underscores how critical it is to innovate around the customer experience (CX).
Buyers have embraced this cornucopia of choice with a healthy appetite to trial, test, and experiment. Brand loyalty is increasingly fragile and fleeting as buyers seek new solutions that specifically address their needs. This lack of buyer commitment is driving even SMBs to offer new purchasing models such as pay-as-you-go service access, guaranteed consumption rates, individually configured bundles, and subscriptions that allow consumers to adjust consumption as their needs grow or change. It can also represent a source of recurring revenue for vendors, which is an attractive business model for a number of reasons.
This shift to on-demand buying preferences started with inexpensive retail goods like groceries and spread to luxury categories like women's fashion. It then expanded to durable goods such as automobiles. Increasingly, we see businesses that sell to other businesses also adopting the subscription business model, even for complex machinery. Giants such as Rolls Royce let companies buy hours of jet engine usage. Medical device manufacturers charge for MRI machines on a per-scan basis, and automotive companies such as Volvo and Porsche are driving full speed into monthly vehicle subscriptions.
As this trend evolves, subscription-based products and service offerings are set to dramatically increase. Subscriptions have exploded in recent years for everything from cosmetics to packaged meal kits. In fact, meal subscription services are expected to exceed $3 billion in 2019. It isn't just niche services that are taking advantage of this shift in buying behaviors. Fortune 1000 industrial names are exploring this game-changing development and rethinking their business models to accommodate new ways to sell products and services. And perhaps more significantly, evolving service delivery models have leveled the playing field for growing businesses to bring new customer experience (CX) options to market.
We're entering an era of experimentation where consumers are questioning the very notion of ownership. Why should they invest in a product upfront when it's more cost-effective to access the service or output the product provides and pay for it via a subscription that changes and evolves as they need it to? An entire generation of buyers is learning that they can have the convenience of almost any product or service without the traditional cost and complexity that comes with ownership. We are seeing that the flexibility of subscribing trumps the status of ownership. We may be seeing the end of ownership.
The opportunity to innovate business models and engage buyers in closer, recurring relationships can be daunting. For growing companies, shifting starts with rethinking internal systems and processes to accommodate new ways of offering products and services. The goal is to create an experience that supports the complete customer lifecycle, including sales, service, fulfillment, invoicing, revenue recognition, customer satisfaction, and renewals. That means tightly integrating processes from the front office all the way through the back office.
As the landscape shifts, your small-to-medium business (SMB) needs new strategies to compete. One of the most effective is by constantly reinvesting in your customer experience (CX) to deliver the variety, flexibility, and ease that audiences want. To prepare for the future, it's important to look holistically at your end-to-end customer experience and tap into how data and information can improve each touch point. Finding new ways to serve customers can create additional revenue streams, bring your products and services to new markets, and help you thrive during the end of ownership.